Expert Excerpts

Stan Friedlander, former Chief Director of Clothing, Jewelry, Watches, and Customer Experience at Amazon

This question is excerpted from the article, The Effects of COVID-19 Will Likely Further Cement Amazon’s Dominance in Retail.


What are the dynamics of the apparel industry as it stands today?

There’s been a huge shift over the past 10 to 12 years in how much business has been done online. Obviously, Amazon is a key component of that, and COVID-19 has essentially brought what would have happened over the next 3 to 10 years in 3 to 6 months. About 25% of the U.S. market segment in apparel was done online, and now, arguably another 10 percentage points could be added to that because of COVID-19.

The big shifts come from shopping trips where people would have to drive 20 minutes each way, and the experience is more of an errand. People will ask themselves, “Can I do this online for the same price, same selection, in less time?” Assuming they’re not getting engagement and enjoyment out of a store environment, then it’s going to shift to online, and COVID-19 just accelerated that. People who’ve now tried Amazon or others will unlikely go back to brick-and-mortar, according to our research.

 

Brijesh Kapil, former Director of Marketing and Sales – Consumer Health, Procter & Gamble

This question is excerpted from the article, COVID-19 May Mean Opportunity for the Indian Consumer Health Industry.


What impact is COVID-19 having on the consumer health industry in India?

COVID-19 doesn’t show any signs of plateauing, currently. Pharma has shown no signs of slowing in India either. In the three years before the first quarter, the NIFTY index has grown from 6,000 to 9,500 points. For most top companies, stock prices are running close to their 52-week highs. Looking at the fast-moving consumer goods industry, the growth was close to 9% and has petered out in Q1 to about 6%. IQVIA is projecting the whole pharma industry to be straddling somewhere close to 1% to 5% growth, with the best case around 6%.

There’s a huge opportunity within the consumer health industry for three strong reasons. First is that, right now, there’s no cure for COVID-19. Vaccines are in development, but the typical time the pharma industry takes to develop a vaccine is around 15 years. It’s a four-month-old virus, and I don’t think we’ll get a vaccine soon. There are no direct cures coming up, so although there are antiretrovirals like lopinavir, ritonavir, and remdesivir, nothing is for sure a therapy. Also, anywhere from 60% to 80% of COVID-19 symptoms are not exhibited. That is a huge challenge; people could be spreading the virus without knowing it.

For consumers, these factors raise health and hygiene concerns. That brings opportunities for the consumer health industry.

 


Robby Mook, former Presidential Campaign Manager for Hillary Clinton

This question is excerpted from the article, Slouching Toward November: Presidential Election Forecast.


Given the ongoing pandemic in the U.S., how can we ensure getting to the polls, and why hasn’t the Democratic National Convention or other organizations tried to figure out a digital voting system?

The problem – or perhaps the strength, depending on your perspective – of the American election system is that voting is controlled by the 50 states. Many states delegate that power down to localities, which translates to more than 8,000 individual jurisdictions that have sovereign control of their elections. The federal government is not permitted to step in and demand uniform standards. Many people don’t understand that.

Regarding digital voting, there’s a lot of cross-pressure ideologically on this issue. The GOP tends to resist any change to voting whatsoever. Many Democrats concerned about election integrity consider a physical paper ballot the most secure voting method and don’t like digital voting either. So, it’s not likely you’ll see very much innovation in this space. People might be more open to it in the future, but considering that the attacks in 2016 came in the digital domain, you’ll likely see continuing trepidation to experiment with voting online.

 


Brian Meert, GLG Council Member and
CEO of AdvertiseMint and author of The Complete Guide to Facebook Advertising

This question is excerpted from the article, Facebook and Instagram Advertising: A Look at the Current Market.


What have the past few months looked like for social media advertising?

The year started out strong – then COVID-19 hit. Some companies paused everything outright. Others were unsure, but in general, there was about a 35% to 40% reduction in ad spending within the first week or two of when the pandemic hit. About 30% of our clients paused their ads totally. These were local attractions, restaurants, live events, and other things that were 100% canceled. About 70% of our clients lowered their ad spending across the board. After that, with fewer advertisers and lower CPMs, many e-commerce clients began to see above-average results. And when stimulus checks started to arrive, their sales exploded. More recently, as businesses have started to reopen, e-commerce has cooled a bit from that peak, although it’s still strong. The protests also had something to do with that. Barring a second wave, many of our clients have adapted to this new world.

 


Bill Dudley, Former President of the Federal Reserve Bank of New York

This question is excerpted from GLG’s Signature Series Spotlight. 


In the 2008 crisis, we saw great cooperation between the Fed, Treasury, Congress, and the executive branch. How do you feel those entities are performing today? Are they communicating effectively? What would be an optimal scenario?

I think the Fed and U.S. Treasury are working very well together. The biggest challenge is that monetary policy may not be sufficient by itself to generate a strong, sustainable recovery. The fact is that the pandemic has and may continue to cause damage to income flows and balance sheets. The Fed’s ability to deal with that is very limited. The biggest issue is whether sufficient fiscal stimulus will be forthcoming to help fill the hole in household, business, and state and local government income. If fiscal policy gets locked on hold because of political polarization in Congress, then we could find ourselves in an even more difficult situation.

 


Hunt Lambert, GLG Council Member and
former Dean, Continuing Education and Extension School at Harvard University

This question is excerpted from the article, Higher Education in a Post-Pandemic World.


How do for-profit universities fit in a world where everyone has an online offering?

The private for-profit schools invented this market and the technology, and taught faculty how to teach in the online mode. So when our team created an all-online public university, Colorado State University Global Campus, we didn’t need to invent much. We just had to do it as a public entity at higher quality and lower cost. I always remember to thank the for-profit universities for building what was needed for us to make it a public good.

That said, they got greedy and collapsed not just from public competition but from regulatory changes they themselves lobbied for. These regulations allowed them to become the best entities in the world at converting Title IV funds into investor profits. In the end, they lost to well-branded local public universities offering online programs at a higher quality and lower cost.

Going forward, institutions like the University of Phoenix will rise again. It’s been hugely revalued and privatized, and is still full of very smart people at a time of rising demand. It doesn’t have to answer to analysts now, allowing it to pivot much more quickly than a public company. For-profits will probably succeed long term by serving the professional education market around micro-credentials that can but often won’t stack to degrees.

 


Tom Wheeler, GLG Council Member and
former Chairman of the Federal Communications Commission
and former Chairman of the Cellular Telecommunications and Internet Association

This question is excerpted from the article, Understanding the Executive Order on Online Censorship. 


What do you think the proper course of action should be for Facebook and Twitter?

 Zuckerberg’s argument that Facebook is a technology, not media, is just irresponsible. Its selling of algorithmic editorial decisions is an activity of a media company. I have been very disappointed in Mark’s reaction; let’s call it for what it is – appeasement. The correct policy would be to apply some of the company’s engineering brain power to build editorial parameters for its AI algorithms. That applies to the YouTube part of Google too, which also needs to step up its responsibilities. By definition, of course, new editorial parameters would reduce revenue. But let’s remember that traditional broadcasters never carried commercials for liquor, condoms or cigarettes, not because of a law, but because the National Association of Broadcasters stuck to a code of behavior. Today, just as in the past, there are bigger things than dollars at stake.

 


Robin Robinson, PhD, GLG Council Member
and former Director of the Biomedical Advanced Research and Development Authority (BARDA) at the U.S. Department of Health and Human Services (HHS)

This excerpt is drawn from the article A Look at Moderna’s SARS-CoV-2 Vaccine.


Vaccine Durability

An important question is whether the durability of the Moderna vaccine varies with age, dose, or other factors; the interim results announced do not address this question. If the immune titers begin to drop, you can record how much of a drop you observe at each interval. Durability limited to three months is problematic, but it’s unlikely that the neutralizing antibody titers will simply return to zero. On the other hand, the titers could plateau and last for at least a year, producing the desired outcome.

 


Dr. Ning Zhu, GLG Council Member and
Chair Professor and Director of Center for Global Acquisition and
Restructuring at PBC School of Finance at Tsinghua University

This excerpt is drawn from the article Post-COVID-19: China May Face an L-Shaped Economic Recovery.


The Resumption of Work

China went into the coronavirus situation about one and a half months earlier than the rest of the world, so it’s coming out of the coronavirus situation one to two months earlier than most other major economies.

China also implemented a strict lockdown policy for the Wuhan province and some other affected cities. That means the rest of China is affected less by the coronavirus situation. As a result, the country is resuming migrant work more quickly than other countries are. Shanghai seems up to 80%-90% back to normal in terms of production and people’s day-to-day life. Beijing appears to have perhaps a 70% resumption of work.

 


Robert Wright, GLG Council Member and
former Executive Vice President and Chief Operating Officer for Wendy’s Co.

This question is excerpted from the article, A Shake-Up Is Coming for Quick-Service Restaurants after COVID-19.


How might the competitive landscape among QSRs look after the COVID-19 dust settles?

There will be a shake-up. The financial pressures alone through this crisis will probably cause several restaurant concepts to lose locations. Large chains will lose restaurants because those marginally performing locations will close. Franchisees and franchisors are going to take advantage of this and close those.

We’ve already seen some bankruptcies announced in the private equity world because they’ve had these highly leveraged buyouts. Likewise, many franchise organizations have had franchisees investing a tremendous amount of capital, much of which has been leveraged over the last five years. The second half of this growth economy was poured back into this business. If they’re struggling to just find four-wall economic profitability and cash flow, it is certain that general and administrative expenses are not being taken care of. This is what will crush them. There’s going to be a shake-up – no doubt about it.

 


Alex Cohen, GLG Council Member
and owner of Future Workspace Development

This question is excerpted from the article, How Has COVID-19 Impacted Commercial Real Estate?


Do you expect companies that want to maintain most employees in offices to increase the total office space to allow more space per employee?

I’m not sure they’ll need more space. A small, boutique firm will likely reconfigure and probably have enough space to satisfy social distancing protocols. They’ll add partitions and spread out their workstations and use less communal space. Larger firms will likely rethink how existing space is allocated.

For example, instead of having a large trading floor, they’ll likely have a limited trading area with additional partitions and spacing. I expect they’ll encourage a proportion of workers to continue to trade or work from home, but in-office, they’ll have specially design collaboration centers, conference rooms, and meeting rooms that meet social distancing standards but also allow face-to-face interaction. They’ll probably encourage people to come in and only use those facilities on an as-needed basis and thus maintain less density daily throughout the office.

 


Troy Ewanchyna, GLG Council Member
and former VP and General Manager at NBCSports.com

This question is excerpted from the article, Sports Television after COVID-19.


As far as a time line for resuming live sports, what do you see?

From a network perspective, the best case economically would be a limited return of the NBA, the NHL, and MLB this season. If that happened, the networks probably wouldn’t have to pay rebates to distributors, they might get some fee relief from the leagues, and they could salvage their advertiser relationships. For the final piece of the Big Four sports, there’s the hope that the NFL returns, maybe even without fans in the stands, because that could drive up ratings even more.

 


Betsey Stevenson, GLG Council Member
and former Chief Economist, U.S. Department of Labor

This question is excerpted from the article, U.S. Employment Outlook: The Impact of COVID-19.


What are your best- and worst-case scenarios for where the unemployment rate might go?

 Right now, the question isn’t so much what the unemployment rate might be in the short term because there will be many temporary layoffs from which people will expect to be recalled. This will certainly help us understand estimates for GDP for Q2, but the real issue is how many jobs are being permanently destroyed.

There are four reasons it’s so hard to guess what’s going to happen in employment now. First is the demand loss due to shelter-in-place, which is soon ending or going to end in many areas. Second is demand loss due to fear. This may worsen because many people in surveys say they’re fearful that states are reopening too soon or that proper safety precautions are not being taken in their area. They’ll be afraid to venture out even once the stay-at-home policies end. Third, there’s demand loss due to loss of income, something that’s likely to persist for quite some time. Fourth, we see some supply chain problems. If you put all those things together, unemployment becomes self-perpetuating. We create more demand loss due to loss of income. We create more job destruction, and the two are permanent.

Thinking about employment rates in 2021 is in some ways more important but harder to forecast than trying to think about the number we’ll see in April. The Congressional Budget Office is currently forecasting 9.5% unemployment at the end of 2021, but in the short term, it depends on whether you look at the top-line BLS unemployment rates or at the decline in employment reported. I think we’ll see between 15% and 25% in April, depending on how many of those things you take into account. If you take them all, we can easily see the broadest measure of unemployment growing up toward 25%.

 


Tim Merrill, GLG Council Member and
former Senior Vice President of Casino Operations at Sands China, Las Vegas Sands

This question is excerpted from the article, The Gaming Industry in the Wake of COVID-19.


What will be the biggest challenges for casinos when they reopen?

First, it’s paying the bills that have been deferred, especially food. If you have an outstanding bill with your food supplier, you’re going to have to pay that before you get another food shipment.

Second is labor. Casinos probably won’t bring back everyone immediately, because the business volume just won’t be there to support it. It’ll be challenging to get the right level of staffing in place yet not blow out your cost structure while trying to scrape together a bit of additional cashflow during the ramp-up period.

The third is customers. Small retail customers, who’ll have to pay their own bills first, will probably lag a month or two behind the bigger players, who likely will return but at a lower frequency until their own small businesses bounce back.

Finally, there’s the regulatory challenges. Because of the layoffs, several processes aren’t being completed right now, from licensing to tax payments, and even if they are, states are operating at a minimum staffing level, so the work isn’t getting processed. When this is over, the industry will need to ensure it’s operating in compliance with regulations.

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